Executive Summary
In Q2 2025, Ralph Lauren Corporation (RL) demonstrated robust performance, recording revenues of $1.726 billion, reflecting a 6% year-over-year increase and a 14% sequential growth from Q1. The company achieved a gross profit of $1.156 billion, with a gross margin of 67.0%, bolstered by improved pricing power and reduced discounting. Executives attributed this success to their diversified growth strategy, enhanced consumer engagement, and continuous strong execution despite a challenging global environment influenced by supply chain dynamics and foreign currency fluctuations. Management is optimistic, raising their full-year revenue guidance to 3%-4% growth in constant currency, highlighting strong performance in direct-to-consumer channels and international markets.
Key Performance Indicators
Key Insights
1. Revenue: $1.726 billion (YoY: +6.0%, QoQ: +14.0%)
2. Gross Profit: $1.156 billion (YoY: +8.0%, QoQ: +8.4%)
3. Operating Income: $178.9 million (YoY: +8.8%, QoQ: -14.2%)
4. Net Income: $147.9 million (YoY: +0.7%, QoQ: -12.3%)
5. EPS: $2.36 (QoQ: -11.6%)
6. Gross Margin Ratio: 67.0%
7. Operating Margin Ratio: 10.4%...
Financial Highlights
1. Revenue: $1.726 billion (YoY: +6.0%, QoQ: +14.0%)
2. Gross Profit: $1.156 billion (YoY: +8.0%, QoQ: +8.4%)
3. Operating Income: $178.9 million (YoY: +8.8%, QoQ: -14.2%)
4. Net Income: $147.9 million (YoY: +0.7%, QoQ: -12.3%)
5. EPS: $2.36 (QoQ: -11.6%)
6. Gross Margin Ratio: 67.0%
7. Operating Margin Ratio: 10.4%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.73B |
5.70% |
14.14% |
| Gross Profit |
1.16B |
8.00% |
8.43% |
| Operating Income |
178.90M |
8.75% |
-14.20% |
| Net Income |
147.90M |
0.68% |
-12.28% |
| EPS |
2.36 |
5.36% |
-11.61% |
Key Financial Ratios
operatingProfitMargin
10.4%
operatingCashFlowPerShare
$1.55
freeCashFlowPerShare
$0.89
dividendPayoutRatio
34.8%
Management Commentary
Pricing Power and Brand Strength: Management emphasized that continued pricing strength, exemplified by a 10% increase in Average Unit Retail (AUR), indicates a growing brand desirability. Patrice Louvet stated, 'Our retail AUR was up another 10% on top of 9% growth last year, ahead of our expectations.'
Strategic Pillars: Executives outlined their three strategic pillars: elevate the brand, drive core products, and expand consumer ecosystems, which underpinned their strong results and operational focus. Louvet noted, 'Our performance underscores the strength of our diversified growth strategy.'
International Markets Growth: Notably, management highlighted China and Europe as key areas of growth with revenues up low-teens, stressing the importance of operations in tier one cities.
Patrice Louvet: 'Our brand has been an important backbone to our pricing power. We’ve put in a lot of work over the last seven plus years to invest in and elevate our brand.'
— Patrice Louvet
Justin Picicci: 'We generated about $300 million in free cash this fiscal year-to-date, enabling returns of approximately $375 million in the form of dividends and share repurchases.'
— Justin Picicci
Forward Guidance
Management raised revenue expectations for FY 2025 to a constant currency growth range of 3%-4%, mainly driven by direct-to-consumer sales and international expansion. Operating margin guidance was also adjusted upwards to encompass an expected expansion of 110 to 130 basis points, reflecting confidence in margin improvement through better product mix and disciplined operational management. Management identified key factors to monitor include supply chain resilience and shifting consumer behavior.